Capacity planning, as a vital asset, is a challenge problem for firms in various industries, such as organic agriculture, apparels and high-tech industry. However, many manufacturers are conservative about their capacity investment for a variety of reasons. As a result, many retailers have the motivation to stimulate manufacturers to enhance the capacity level. In this paper, we propose a revenue sharing and capacity cost compensation contract to help the retailer stimulate her manufacturer to increase the capacity level. In the contract, the retailer keeps a portion of sales revenue and compensates for the manufacturer’s capacity cost. They face a stochastic demand and play a Stackelberg game where the retailer acts as a leader and the manufacturer acts as a follower. We prove that the channel can be perfectly coordinated through our proposed contract. Moreover, we give a feasible range of profit distribution, in which both channel members can earn no less profit than that in non-cooperation. Meanwhile, comparing with centralized channel with multiplicative demand, we find that capacity in decentralized channel tends to be lower.
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DOI : 10.1051/ro/2020056
Keywords: Supply chain management, capacity compensation, cooperative game, coordination mechanism
@article{RO_2021__55_S1_S1789_0,
author = {Shan, Feifei and Dai, Xiaopei and Men, Jinqi and Yang, Feng},
title = {Coordinating a decentralized supply chain with capacity cost compensation},
journal = {RAIRO. Operations Research},
pages = {S1789--S1802},
year = {2021},
publisher = {EDP-Sciences},
volume = {55},
doi = {10.1051/ro/2020056},
mrnumber = {4223151},
zbl = {1469.90030},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2020056/}
}
TY - JOUR AU - Shan, Feifei AU - Dai, Xiaopei AU - Men, Jinqi AU - Yang, Feng TI - Coordinating a decentralized supply chain with capacity cost compensation JO - RAIRO. Operations Research PY - 2021 SP - S1789 EP - S1802 VL - 55 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2020056/ DO - 10.1051/ro/2020056 LA - en ID - RO_2021__55_S1_S1789_0 ER -
%0 Journal Article %A Shan, Feifei %A Dai, Xiaopei %A Men, Jinqi %A Yang, Feng %T Coordinating a decentralized supply chain with capacity cost compensation %J RAIRO. Operations Research %D 2021 %P S1789-S1802 %V 55 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2020056/ %R 10.1051/ro/2020056 %G en %F RO_2021__55_S1_S1789_0
Shan, Feifei; Dai, Xiaopei; Men, Jinqi; Yang, Feng. Coordinating a decentralized supply chain with capacity cost compensation. RAIRO. Operations Research, Tome 55 (2021), pp. S1789-S1802. doi: 10.1051/ro/2020056
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